A lot of our readers lament the day when Chase took over WaMu, and by all measures Chase made things worse for former WaMu customers. But here is a not-so-subtle reminder that WaMu was also a bank firmly steeped in ineptness and unpalatable policies.
Ineptitude, WaMu failure | admin June 26, 2011 | 
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The Puget Sound Business Journal has done some great coverage of the Washington Mutual seizure and the aftermath over the last couple of years, one of which has been the digging into the long delay between the announcement of JPMorgan Chase’s purchase of WaMu’s assets and the closing of the deal. The latest entry in this story questions whether Chase had the legal right to foreclose on WaMu loans in the period where the sale had not yet completed.
But that raised questions, such as: Who owned the assets of failed WaMu in the interim? Was JPMorgan able to foreclose on homeowners with Washington Mutual mortgages before the sale of the assets was complete? Those answers remain hazy. I put in calls to Gray at the FDIC and a Chase spokeswoman today, though neither were immediately available.
The answers to these questions could allow tens of thousands of WaMu customers whom Chase foreclosed upon in the interim to challenge the foreclosures.
WaMu failure | admin May 10, 2011 | Comments (0)
As Washington State was ground zero for the WaMu seizure and sale to JPMorgan Chase because WaMu was based in Seattle, the Puget Sound Journal has been particularly diligent in tracking down information about the process and the aftermath and reported several stories last year about how the sale of WaMu to JPMorgan Chase wasn’t actually closed, leading to speculation that JPMorgan Chase might be made to pay more for what they bought.
But not, in a strange and fishy twist, the FDIC now says that at least some of the reports of the sale closing being extended are wrong, and the sale was closed last September.
The sale of Washington Mutual to JPMorgan Chase & Co. closed Sept. 1, 2010, according to the Federal Deposit Insurance Corp., who said today a previous statement that the sale had been extended through October 2010 was incorrect. The Seattle thrift was closed by regulators on Sept. 25, 2008.
Last August, a document surfaced that revealed the two-year-old sale was still pending because of an extension, supposedly one of many. The last time I checked with the FDIC about the status of the sale was early October 2010, and at that time spokesman Andrew Gray said the final closure date had been pushed out another 30 days.
However, that information was incorrect, he told me this week. The last extension had a Sept. 30, 2010 deadline, not Oct. 30, 2010 like he thought. The sale was closed on Sept. 1, 2010, said Gray.
“For some reason I was told that there was a second extension and that was not the case,” said Gray in an email.
The terms of the deal remain the same, he said. JPMorgan purchased WaMu’s assets for $1.88 billion from the FDIC. Some shareholders held out hope the extension of the sale would mean the purchase price may increase, especially since JPMorgan bought the thrift for a small fraction of its $307 billion in assets at the time it was closed.
However, Gray confirmed the details of the purchase and assumption agreement, which are available on the FDIC website, have not changed. I have submitted a request through the Freedom of Information Act for all the extension documents, and have been told that request will be expedited. I’ll post them on our website as soon as I receive them.
WaMu failure | admin April 13, 2011 | Comments (0)
This makes perfect sense. The FDIC has to prove that it was justified in siezing WaMu and finding former executives guilty of mismanaging the bank is a good way to swing the public perception.
FDIC Sues Ex-Washington Mutual CEO Killinger for Bank Losses
Former Washington Mutual Inc. Chief Executive Officer Kerry Killinger and Chief Operating Officer Stephen Rotella took extreme risks with the bank’s home-loans portfolio, causing billions of dollars in losses, the Federal Deposit Insurance Corp. said in a complaint.
Rotella, Killinger and David Schneider, Washington Mutual’s home loans president, showed reckless disregard for the bank’s long-term safety and instead focused on short-term gains to increase their compensation and “should be held accountable,” the FDIC said in the complaint filed March 16 in federal court in Seattle. The agency seeks unspecified damages and an order freezing the assets of Killinger and Rotella and their wives.
Federal regulators seized Washington Mutual, once the nation’s biggest savings and loan, in September 2008 and sold it to New York-based JPMorgan Chase & Co. for $1.9 billion.
Bank executives blamed Killinger, who was CEO for 18 years, during hearings before the U.S. Senate last year for ineffective management controls and lax lending standards.
“This action runs counter to the facts about my relatively short time at the company,” Rotella wrote in a letter e-mailed to Bloomberg by his spokesman, Daniel Hilley. “As you might imagine, I am angered by this abuse of power by the FDIC.”
JPMorgan spokesman Joseph Evangelisti declined to comment. No phone number is listed for Kerry Killinger in Washington State and Schneider couldn’t immediately be reached for comment.
The case is FDIC v. Killinger, 11-00459, U.S. District Court, Western District of Washington (Seattle).
WaMu failure | admin March 18, 2011 | Comments (0)
Yet another twist in the Washington Mutual bankruptcy proceedings and the attempt by shareholders to get at least some value out of the deal. Shareholders, who had requested the appointment of an examiner to investigate the possibility of improprieties by JPMorgan Chase and possibly others in influencing (helping) the failure and seizure of Washington Mutual, were disappointed last month when the examiner reported that he found nothing wrong. The heart of their argument for having an examiner appointed was this:
Some Washington Mutual stakeholders have argued that JPMorgan engineered a plan to damage Washington Mutual Bank so it could buy it on the cheap, engaging in sham negotiations to gain confidential information from Washington Mutual that it then misused and leaked to gain an unfair advantage in obtaining the bank assets at a fire sale price.
The shareholders were able to convince the judge to exclude the examiners report excluded from the bankruptcy proceedings. The current bankruptcy plan is based in part on the examiners report.
WaMu failure | admin December 3, 2010 | Comments (0)
I was hoping the FDIC wouldn’t let JPMorgan Chase walk all over it by accepting responsibility for the investor lawsuits filed against JPMorgan Chase for the failed WaMu CDO securities, and it looks like the FDIC actually grew some backbone and is claiming JPMorgan Chase is attempting to rewrite history, and that they never agreed to accept responsibility for such lawsuits.
It would be a shame of JPMorgan Chase was allowed to bully its way into reaping even more benefit from the WaMu acquisition, and it looks like they aren’t going to be able to without a fight.
WaMu failure | admin November 30, 2010 | Comments (0)
Washington Mutual shareholders, set to get zero from the WaMu bankruptcy, have no gone as far as to allege fraud in the bankruptcy proceedings, as they claim the attorney representing the debtor (Washington Mutual) was also representing JPMorgan Chase.
Additionally, there has never been a complete listing of all of Washington Mutual’s assets.
Yea, all of that does seem kind of fishy.
WaMu failure | admin November 23, 2010 | Comments (1)
Joshua Hochberg, the examiner tasked into reviewing the failure of Washington Mutual and its sale to JPMorgan Chase for signs of wrong doing released his report today and found that the current settlement before the bankruptcy court is reasonable.
While not surprising given the potential for instability of the nations second largest bank if JPMorgan Chase was found guilty of manipulating WaMu to get a better deal before WaMu failed, the finding is disappointing, especially considering the following statement made by in the report:
It also found that JPMorgan was able to make changes to the FDIC’s purchase and assumption agreement even though other bidders were told it was nonnegotiable.
“While the foregoing facts suggest that the sale process could have been better, they do not, in the examiner’s view, suggest an unfair process under the circumstances or that a different process would have changed the outcome,” the report said.
That deck definitely seemed stacked against WaMu and in favor of JPMorgan Chase.
WaMu failure | admin November 1, 2010 | Comments (0)
